What payment gateway should I choose for Shopify in South Africa?
One of the most important decision to make when setting up your Shopify ecommerce store is which payment gateway to use to process payments online.
It is crucial to establish which of the payment gateways does your ecommerce site support. When using Shopify, the options for payment gateways are:
- PayFast
- PayFlex
- PayGate
- Peach Payments
- Ozow (Automated EFT)
- PayStack
- PayPal
- PayU
There are three things to consider when deciding which payment gateway is best for your store and business.
1. Transaction Costs
How much will the bank and payment provider charge you per transaction? It is important to know how much of your sale you will pocket and how much will be taken in fees.
This table shows the costs and rates of some of the gateways available on Shopify.
| Payment Provider | Account Type | Cards | EFT | Trans Fee – Flat Rate | Monthly Fee | Settlement |
|---|---|---|---|---|---|---|
 | Individual or Business | 3.5% | 2% | R2 | Free | R8.77 |
 | Individual or Business | 3.35% + R1 | 3.35% | Dependant on Pay Now or Pay Later | R249 | Included in Monthly Fee |
 | Business | 3.5% | 1.5% | R2 | R99 and up | R8.77 |
 | Individual or Business | 2.9% | 1.5% | R1.50 | Free | Settlements are daily or weekly, depending on plan |
 | Individual or Business | 2.9% | N/A | R1 | Free | Free-Weekly |
 | Individual or Business | 2.7% | 2.4% to 3.4% plus $0.30 per transaction | 2.4 -3.4% + $0.30 per transaction | Free | Free |
 | Individual or Business | 2%+GST | 2%+GST | 2%+GST | Free | Free |
 | Individual or Business | If monthly processing volumes via Ozow is below R1M, your fees will be 0% for the next 12 months. | If over R1m or from month 13 your fees will be between 2,5% – 1,5%. | If your monthly processing volumes are over R1M, then starting fee between 2,5% and 1,75%. |
2. Merchant Account vs No Merchant Account
One if the most important considerations when deciding on a payment gateway is whether to use a merchant account with your bank (e.g., PayGate) or a payment aggregator like PayFast or PayPal.
There are advantages and disadvantages to both.
Merchant Account:
Advantages
- Money is deposited directly into your business bank account.
- If you have a large quantity of transactions, you can start to negotiate with the bank for better rates.
- Allows you to process larger amounts over credit card.
Disadvantages
- It takes time and administration to set up and be approved for a merchant account.
- A small fee is charged by the bank for every payment that is settled.
Payment Aggregator (PayFast/ PayPal)
Advantages
- Quick and easy to set up
- Once off set fee to transfer funds from your payment gateway account to your business bank account
Disadvantages
- Limits are imposed on the maximum amount that can be processed (PayFast)
- Fees can be higher than when using a merchant account
- Difficult process to set up payments from PayPal into FNB to your bank account
- Very high PayPal fees
3.Customer Perception
It is important for your customers to trust your payment process, so you must make sure the option you choose is safe, reasonably well known and looks and works well from the customers perspective.
Customers will be put off from finalizing a purchase purely due to how safe they feel the gateway is and whether the payment gateway provides a convenient purchasing experience.
4. Alternative Payment Methods
It can also be important to decide whether allowing for credit, or split payments over a couple of months or instant EFT is important for your customers and whether it will help make their purchases easier.
A wider choice to your customers can allow them to choose a payment method they feel most comfortable with. However, you do not want to over complicate it.
Crunch some numbers yourself and see which option works best for you. If you are a new and or smaller business, you can save yourself some effort and money by sticking to a payment aggregator to prove your concept. If you are a larger business, you may have to go through the initial struggle of opening your own merchant account, but you may end up saving money.
We hope you found this article helpful.
In summery here are what some of the payment gateways greatest strengths are:
- PayFast: Quickest and easiest to set up and use in South Africa.
- PayPal: Biggest brand but charges the highest fees.
- PayGate and PeachPayments: Great merchant account options.
- PeachPayments:
- A plugin for subscription billing and recurring payments
- Also have a retry payment feature that allows customers to retry their payments with another payment method without having to retype all their details.
- PayFlex: Allows customers to split their payments over a few months. Pay Now or Pay Later.
- Ozow and PayU: Allows for instant EFT.
